Enovix stock has been on a roller-coaster ride since going public less than two years ago. The maker of next-generation lithium-ion batteries recently saw its shares drop to a record low on manufacturing snags and an executive shake-up.
Company executives say the pressure is on them now to execute and show they can mass-produce their advanced batteries, starting with cells for wearables and smartphones.
Fremont, Calif.-based Enovix replaced its chief executive last month after a disappointing third-quarter report. In that Nov. 1 report, the company disclosed that it had missed milestones for producing its batteries at scale. Enovix stock tumbled more than 41% the day after releasing the report.
"Our gen-one production output is probably lower than most people expected it to be," Ralph Schmitt, senior vice president of sales and business development at Enovix, told Investor's Business Daily at the CES 2023 trade show. "But the next gen will be significantly higher. We've been saying four to five times the output."
Enovix Batteries Boast Higher Capacity
Enovix makes advanced silicon-anode lithium-ion batteries. The company's proprietary 3D cell architecture is designed to increase energy density and maintain high cycle life. The initial market for its batteries is mobile devices, but the company expects to expand eventually into the electric-vehicle and energy-storage markets.
Enovix batteries pack 30% to 100% more power into the same area as traditional lithium-ion batteries, Schmitt said. Also, its silicon-anode batteries don't have the fire risk of today's graphite-anode lithium-ion batteries, he said.
"We've proven the technology now," Schmitt said. "It's been 15 years that this company has been working on this. The first 10 years were really dedicated to ensuring that the technology works. We've been able to ship product for the last five years or so to customers and have done significant amounts of testing. And clearly they've all said that it does work and meets their requirements."
Mass Production Still To Come
The issue recently has been getting the production volumes up. Its initial production line now runs thousands of battery cells a day, but the process needs more automation, Schmitt said.
The company's second-generation production line will be located at a site in Asia, closer to many customers, he said. Enovix expects that factory to produce millions of batteries a year. Meanwhile, details of the new plant will be announced in July.
"It's really just execution of getting to scale that's important," Schmitt said.
New CEO Gives Enovix Stock A Lift
To meet the challenges of increased production, Enovix announced on Dec. 29 that it has hired Raj Talluri as president and chief executive, effective Jan. 18. Enovix stock popped 15% on the news. Talluri is a veteran semiconductor executive who joins Enovix from Micron Technology. Before that, he worked at Qualcomm and Texas Instruments.
"We are going to infuse Enovix with a silicon-industry mindset," Executive Chairman T.J. Rodgers said on an investor webcast late on Jan. 3. But investors sold off Enovix stock after the webcast. Shares dropped to an all-time low of 6.50 on Jan. 4.
Enovix Stock Gets Buy Rating
Still, Oppenheimer analyst Colin Rusch reiterated his outperform, or buy, rating on Enovix stock after the webcast.
"Enovix has an impressive amount of customer engagement and collaboration for an early-stage company, which we view as a strong validation of its offering and technology position," he said in a note to clients last week. Initial customers have included Samsung and the U.S. Army. Analysts say Apple is a potential customer as well.
Also, the production-ramp challenges that Enovix is facing appear well-characterized and manageable, Rusch said.
Enovix stock began trading in July 2021 after the company merged with a special purpose acquisition company. Shares reached a record high of 39.48 in November 2021.
On the stock market today, Enovix stock rose 2.8% to 8.55.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
